Charlotte Economist John Connaughton Says Recession Unlikely In 2024
In an uplifting forecast that might put recession fears on the back burner for now, the latest economic projections indicate that while the ghost of inflation still wanders, a downturn in 2024 seems unlikely. This comes amid a surge of consumer spending that has propelled growth in both the North Carolina and U.S. economies, with no signs of slowing down just yet.
“Overall, the final numbers for 2023 look good, with a strong second half of the year, which led to 2.8% annual Gross Domestic Product growth for North Carolina,” John Connaughton, a professor of financial economics at UNC Charlotte’s Belk College of Business, remarked during the unveiling of the North Carolina Economic Forecast 2024 First Quarter Report on Thursday, March 14.
Despite the Federal Reserve’s steadfast approach to tightening monetary policy over the last two years, Connaughton highlighted that the U.S. economy has remained resilient. “Even as the Fed holds steady on the brakes,” he noted, “Congress and the President continue to stimulate the economy with fiscal policy deficit spending.” He voiced concern over projected deficits topping $1.6 trillion or almost 6% of GDP for fiscal years 2023 and 2024, labeling such spending as “irresponsible” in the current economic climate. “If Congress does not control fiscal spending, we are unlikely to see a recession in 2024; however, we are likely to see a slowing economy and a return of inflation,” Connaughton cautioned.
North Carolina’s 2023 Economic Performance: A Closer Look
The state’s economy saw a 2.8% increase in real GDP over 2022, marking the third consecutive year of growth post-COVID-19. The forecast anticipates growth across various sectors, with Information and Retail Trade leading the charge, showcasing impressive growth rates of 12.7% and 9.5%, respectively. Conversely, sectors such as Agriculture and Mining faced downturns.
On the employment front, North Carolina added 99,400 net jobs in 2023, a 2% increase from the previous year, pushing the state’s employment to 4,951,900 by December 2023. This growth is mirrored across nine of the state’s 14 nonagricultural sectors, with Educational and Health Services, and Hospitality and Leisure among the top performers.
Looking Ahead: 2024 Projections
The forecast for 2024 continues to be positive, with expected real GDP growth of 2.5% and output increases in 13 economic sectors. Employment is also on the rise, with an anticipated addition of 53,500 net jobs by December 2024, reaching a total of 5,005,400 persons and nudging the unemployment rate to an expected 4%.
In essence, while challenges like inflation remain on the horizon, the economic outlook for North Carolina and the broader U.S. economy in 2024 is cautiously optimistic, underpinned by robust consumer spending and continued growth across most sectors.